June 18 (Bloomberg) -- Cynthia Stafford’s career sounds
like a Hollywood movie pitch: A single woman who quits her job
to raise her deceased brother’s five kids wins part of a $112
million lottery jackpot.

She goes on to produce films. She rubs shoulders with stars
like Angela Bassett and Halle Berry. She gets pointers from
DreamWorks SKG’s co-founder, David Geffen.

Her work this year will decide whether she can write a
happy ending. Stafford’s Queen Nefertari Productions LLC, formed
with her 2007 California Mega Millions winnings, is making its
first films, the supernatural thriller “Undying” and the
comedy “Adrenaline.” She recalls Geffen’s counsel: Spread the
risk, or she’d be better off trying to win the lottery again.

“His advice was, ‘Don’t do it unless you have a large sum
of investors’ capital,’” said Stafford, 47, who talked to him
as part of donating $1 million to the Geffen Playhouse in Los
Angeles. “I said, ‘Well, I intend to.’ He got a little quiet
and said, ‘If that’s what you’re going to do, be smart about
it.’”

Hollywood can be tough on newcomers who typically don’t
understand movie finances, said James D. Stern, a Tony Award-winning Broadway producer who co-financed the Oscar-nominated
drama “An Education.” Only about three in 10 movies make
money, according to Harold Vogel, author of “Entertainment
Industry Economics: A Guide for Financial Analysis.”

Luring Investors

“When you first come to Hollywood, people assume you don’t
know how to make a deal,” said Stern, who founded film
production company Endgame Entertainment in 2003. “People are
there to take advantage of you. As an industry we don’t have a
long-term point of view of taking care of people who have
capital.”

Stafford’s business plan is built on sharing financial risk
as laid out by Geffen, who Forbes ranked last year as
Hollywood’s richest man with a $5 billion fortune. He declined
by e-mail to comment.

The $30 million fund she set up for moviemaking includes
contributions from several private investors, said Jeff
Kalligheri, head of productions at Santa Monica, California-based Queen Nefertari.

Kurt Russell has signed on to star, and Jon Amiel, whose
credits include “Creation” and “Entrapment,” will direct.
They want to reduce costs in the budget, projected at $20
million to $30 million, with tax incentives as production starts
this fall, Kalligheri said.

‘Swimming With Sharks’

“We’re looking for projects that we don’t have to put up
full equity for,” Kalligheri said. “If we can’t structure a
deal in a way that makes sense, we’re just not going to do it.”

Stafford’s advisers include Jay Cohen, head of the film-financing unit for Gersh Agency, who has helped set up movies
such as “Bride Wars” and “Swimming with Sharks.” He forwards
potential projects for Kalligheri and Chief Operating Officer
Lanre Idewu to recommend to Stafford.

The strategy may not protect Stafford. The motion picture
business is getting tougher even for the biggest producers
because studios are distributing fewer films to reduce costs,
Vogel said.

Lucky Number

Stafford said she understands the risks of filmmaking. She
kept a portion of her winnings in stocks, though she says that
hasn’t felt much safer this year than producing movies.

“With movies, yes, it’s a risky business,” she said.
“But it’s also a fun thing if you do it right. And it’s a
creative venue.”

Stafford won her fortune on Mother’s Day 2007 with a $2
lottery ticket she bought with her father and a brother, opting
to split a $67 million immediate cash payout. She had quit a job
at her father’s auto wholesale business to care for her nieces
and nephews in the Los Angeles suburb of Hawthorne, after
another brother was killed in a car accident.

More than a year before winning, the figure of $112 million
came to her, she said. Stafford said she wrote down the number
and tried to focus on it during busy days raising kids.

“I come from a sales background and I remembered from my
training to write down my goals,” Stafford said. “I wrote it
pretty large and put it on my wall.”

She bought her ticket when she noticed the California Mega
Millions jackpot was $112 million.

It may become the stuff of movies. Kalligheri said that
after completing “Undying,” Queen Nefertari will consider
producing Stafford’s life story.